Published 6:30 am, Friday, December 19, 2008

The world’s second largest offshore drilling contractor, now incorporated in the Cayman Islands and run from Sugar Land, said its board has approved the change, and now will put the proposal to shareholders and the Cayman courts.

Noble Chairman and Chief Executive Officer David Williams cited Switzerland’s “stable commercial and financial environment and its well-established tax regime” as a motivation for the change, which could take place by early 2009.

But the company is still evaluating whether to move any people or operations to Switzerland as part of the reincorporation.

“If we conclude that relocation is appropriate, we could begin to move personnel at any time, either before or after we conclude the transaction,” he said.

The announcement came the same day Transocean, the world’s largest offshore driller, completed the process of changing its incorporation from the Cayman Islands to Switzerland. With the change, CEO Robert Long and other top officers will leave Houston to run the company from a new European headquarters.

Last week, Houston oil field services giant Weatherford International announced plans to reincorporate in Switzerland and move its CEO, Bernard J. Duroc-Danner, and other top officers there. Shareholders have not yet approved the change.

And other companies, including Tyco International and construction firm Foster Wheeler, have also recently announced plans to reincorporate in Switzerland.

Chiefly, the moves are designed to preserve tax benefits the companies enjoyed from being domiciled in countries like Bermuda and the Cayman Islands with favorable corporate tax rules, said Pierre Conner, an industry analyst with Capital One Southcoast in New Orleans.

“Now, what we’re finding is those companies feel there are better tax protection in Switzerland than in these countries,” he said. “So they’re going ahead and making another step to protect the current tax structures that they have,” Conner said.

Noble, which moved its incorporation from Delaware to the Cayman Islands, currently has an effective tax rate of about 19 percent, said Angie Sedita, industry analyst with Macquarie Capital, in a note to investors today.

Lawmakers have threatened to close tax loopholes that allow U.S. companies to benefit from incorporating in offshore tax havens while operating from the U.S. But Switzerland has tax treaties with the U.S. that would protect companies even if the laws change.

“Incorporating in Switzerland should ensure the same tax advantages,” Sedita said.

In addition, the move will put Noble closer to a faster-growing customer base in the eastern hemisphere, where more than half of its revenue comes from today.

Noble has about 6,000 employees worldwide, with roughly 300 at an operational headquarters in Sugar Land.

The company has 63 drilling rigs in its fleet, second only to Transocean. Of these, eight are currently deployed in the U.S. Gulf of Mexico; the remainder are in other markets, including Mexico, Brazil, West Africa, the North Sea and the Middle East.

Regardless of what happens with the headquarters, “our division offices will continue to operate as they do today, with support from centralized services located in Sugar Land,” Noble spokesman John Breed said.

Today, analysts also mentioned Nabors Industries, the world’s largest land driller, as another likely candidate for reincorporating in Switzerland given that its current headquarters is in Bermuda.

But a spokesman for the company, which is also run from Houston, was traveling and not available for comment.